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Sniazhana Sniazhko |
Received: 03 April 2019 Abstract: Uncertainty is a key contextual factor that affects the decision-making of
Accepted: 29 July 2019
multinational corporations on many types of international operation. However, the
Published: 06 August 2019
variety of ways in which uncertainty has been defined and studied in the interna-
*Corresponding author: Sniazhana
Sniazhko, School of Management and tional business literature, has contributed to a fragmented view of MNC behavior
Public Administration, University of and of the role of uncertainty in international decision-making. Adopting a broad
Vaasa, PL 700, Vaasa 65101, Finland.
E-mail: sniazhana.sniazhko@uva.fi view of uncertainty, and by means of a systematic review, this paper examines the
Reviewing editor::
treatment of uncertainty in international decision-making in the IB literature and
Etayankara Muralidharan, School of identifies directions for future research. The review organizes studies across 13
Business, MacEwan University,
Edmonton, Canada dimensions of uncertainty and eight approaches to managing it. The paper further
Additional information is available at
identifies five characteristics of individual decision-makers that have been shown to
the end of the article impact their perceptions of uncertainty and their choice of uncertainty manage-
ment approach. Based on this systematic review, the paper makes three main
critical observations about existing research: inconsistency in the conceptualization
and measurement of uncertainty, lack of diversity regarding the dimensions of
uncertainty included in single studies, and downplaying the role of individual deci-
sion-makers. A research agenda is presented that offers suggestions on how future
research might address these limitations.
© 2019 The Author(s). This open access article is distributed under a Creative Commons
Attribution (CC-BY) 4.0 license.
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1. Introduction
Uncertainty and its role in decision-making is an important phenomenon that has received consider-
able research attention within international business (IB) studies over the last five decades.
Uncertainty, defined as the lack of knowledge about the probabilities of the future state of events
(Knight, 1921), has been shown to affect multinational corporations’ (MNCs) speed of international
expansion, their internationalization paths, entry mode choices, and level of commitment (e.g.,
Aharoni, 1966; Aharoni, Tihanyi, & Connelly, 2011; Ahsan & Musteen, 2011; Johanson & Vahlne,
1977; Liesch, Welch, & Buckley, 2011). The inability of a decision-maker to eliminate uncertainty
completely constrains the effectiveness of decision-making and requires the adoption of approaches
that either help to reduce, or to cope with, uncertainty. Recent studies commonly differentiate
between exogenous and endogenous uncertainties, as well as environmental, industry, and firm
uncertainties. They also advocate the diligent management of uncertainty to improve the chances of
MNCs surviving in the international business environment (Certo, Connelly, & Tihanyi, 2008).
Although uncertainty has been incorporated into many studies on decision-making within MNCs,
the IB literature lacks clear distinctions between different dimensions of uncertainty and often
treats the concept inconsistently. Research distinguishes between environmental and firm uncer-
tainties, yet the dimensions used to capture such uncertainties vary significantly among studies.
This inconsistency is problematic because it provides conflicting results about MNCs’ decision-
making under uncertainty, impedes knowledge development and a systematic treatment of
uncertainty, and presents an incomplete picture of the role uncertainty plays in international
decision-making. In terms of practice, the lack of clear distinctions among different dimensions
of uncertainty may result in misleading perceptions of the real environment and subsequently to
risky and unjustified decisions (Brouthers, 1995).
In light of the above, this paper offers an in-depth analysis of what is known about uncertainty in
the IB literature. Accordingly, it first aims to provide insights into the ways in which uncertainty is
treated and managed in decision-making in the theoretical and empirical IB literature, and further,
to address the uncertainty treatment issues in international decision-making arising in the articles
reviewed. Overall, this paper seeks to offer a comprehensive overview of existing knowledge on
uncertainty in the IB literature, and to suggest areas for future research. In doing so, the paper
contributes to the literature on decision-making in IB in the following three ways. First, it addresses
the inconsistent conceptualization and measurement of uncertainty by organizing and synthesiz-
ing the dimensions of uncertainty into an integrative framework that should be useful to scholars
in this field. Second, the paper presents arguments for why being more consistent in the use of
concepts and measures of uncertainty, using a wider spectrum of different kinds of uncertainties,
and integrating the characteristics of the key individual decision-makers, would advance the field
and add significantly to the predictive validity of theoretical models. This serves to highlight key
issues that should be considered when deciding how and why to incorporate different dimensions
of uncertainty into empirical studies on MNC decision-making. Finally, the paper contributes to the
IB literature by proposing an agenda for future research on decision-making under uncertainty.
More specifically, the agenda provides suggestions for how the field could benefit from studies that
include (1) dimensions of uncertainty that are more conceptually and statistically parsimonious
and the greater use of subjective measures of uncertainty; (2) a wider spectrum of uncertainties, in
particular firm dimensions of uncertainty, within single studies; and (3) the role of individual
decision-makers in how different dimensions of uncertainty are perceived and managed within
the MNC. This paper complements existing reviews on similar topics (e.g., Ahsan & Musteen, 2011;
Shepherd & Rudd, 2014) by providing a more detailed categorization of uncertainty and an
extended critical review of uncertainty management in international decision-making, thus making
the review of broader value to scholars in different management disciplines.
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2. Method
The current research adopts the systematic literature review method, which offers an explicit,
trustworthy, and reproducible method to minimize bias, thus providing more reliable findings for
the evaluation and interpretation of previous research relevant to a particular theme of interest
(Alderson, Green, & Higgins, 2004). Since this paper integrates a framework-led approach to the
synthesis of the literature, the practices recommended by Denyer and Tranfield (2009) for con-
ducting a systematic literature review are most relevant. These practices have been designed
particularly for management and organization studies and have been used by other scholars to
conduct systematic literature reviews in the business field (e.g., Ellwood, Grimshaw, & Pandza,
2016). Denyer and Tranfield (2009) develop four key principles that should be evident within
a systematic literature review: transparency and inclusivity, and it should also be explanatory
and heuristic. In terms of transparency, this paper explicitly describes the processes and methods
employed in the review1. To demonstrate inclusivity and the quality of information sources, this
paper places emphasis on the reviewed articles’ reported methods of data collection and analysis,
with detailed information on uncertainty measures. This paper aims to provide an explanation of
conflicting extracts from individual studies and to integrate them into a holistic view on the
treatment of uncertainty in IB studies. The result of this review is heuristic in the sense that it
offers suggestions that may help in addressing the mixed findings regarding the impact of
uncertainty on MNC decision-making.
Second, the articles included in the review should have an explicit focus on the impact of
uncertainty (or its synonyms)3 on MNCs’ international strategic (e.g., decisions about foreign direct
investment and related strategies, entry mode choices, and foreign partners and market selection),
and operational decisions (e.g., product development, staffing, inter-firm trade). Reading the titles
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of the articles and removing duplicates from the list reduced the number of articles to 581. Most of
the excluded articles related to non-management topics (e.g., technical or engineering articles,
articles with mathematical models, or articles in neuroscience). The abstracts of the 581 remaining
articles were read, which resulted in a total of 278 articles being deemed relevant for the review.
The articles that were left out focused on other units of analysis (e.g., focus on the country) rather
than on MNCs.
The third and final inclusion criterion was that articles should either look at the impact of
uncertainty on MNCs’ international decision-making, or examine the kind of uncertainty manage-
ment methods used. This criterion is applied to examine how the recognized uncertainties shape
MNCs’ decision-making under uncertainty and how MNCs respond to these uncertainties. Articles
that met all three inclusion criteria were considered for the review, producing a final total of 114
articles (18 conceptual; two theoretical; and 94 empirical, of which 84 were quantitative, six were
qualitative, two used mixed methods, and two a simulation model). All the articles provide an
explicit definition of uncertainty (or its synonyms) in terms of its dimensions (i.e., environmental,
industry, or firm uncertainties).
Among the 114 articles reviewed, seven of the conceptual articles do not define uncertainty in
terms of its dimensions and describe uncertainty as a general term for an MNC’s lack of informa-
tion about its external market. Further, these articles do not provide any measures of uncertainty.
However, even though the inclusion criterion was not fully met for these articles, they were still
included due to their rich description and discussion of relevant concepts, and detailed reviews of
the role of uncertainty in MNCs’ decision-making. Empirical papers that did not present an explicit
definition of uncertainty dimensions and/or its measures were excluded from the review since the
lack of an explicit description of uncertainty measures in an empirical article brings into question
the contribution of the research.
Furthermore, not all articles among the selected 114 elaborate on MNCs’ uncertainty manage-
ment methods. A group of 18 papers (four conceptual, one theoretical, and 13 empirical) did not
provide an explicit examination of uncertainty management methods, but still became part of the
review because they either offered detailed measures of uncertainty dimensions or incorporated
different theoretical perspectives offering diverse views on the impact of uncertainty on MNCs’
decision-making. Finally, this systematic review is not exhaustive in the sense that studies that are
published in book format, in other journals, or in languages other than English were excluded.
A summary of the selection process and exclusion criteria is presented in Table 1.
The selected 114 articles are distributed among the following 23 journals (number of articles per
journal in parentheses): Academy of Management Journal (4), Academy of Management Review (1),
Administrative Science Quarterly (1), British Journal of Management (2), Business Horizons (1),
Columbia Journal of World Business (1), Decision Sciences (1), European Journal of Marketing (3),
International Marketing Review (7), International Business Review (18), International Journal of
Operations and Production Management (1), Journal of Business Research (5), Journal of
International Business Studies (25), Journal of International Management (7), Journal of
Management Studies (5), Journal of Management (2), Journal of Marketing Research (1), Journal
of World Business (13), Long Range Planning (1), Management International Review (5),
Management Science (1), Organizational Science (4), and Strategic Management Journal (5).
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Reading of abstract Does the article focus on uncertainty and its 278
impact on MNCs’ international decision-making?
The following articles were excluded:
● Articles focusing on uncertainty/risk in terms of
Reading of full paper Does the article offer a detailed description of the 114
uncertainty (or its synonyms) dimension/measure?
Does the article test/investigate/discuss the impact
of uncertainty (or its synonyms) on MNCs’
international decision-making?
Does the article test/investigate/discuss MNCs’
uncertainty management methods?
The following articles were excluded:
● Articles mentioning uncertainty (or its syno-
nyms) without defining its dimensions or
measures
● Articles not identifying/discussing/testing
uncertainty management methods
The second phase of the analysis focused on identifying how uncertainty management
approaches have been defined in the reviewed articles, and which approaches are most commonly
applied by MNCs. Definitions derived from both Miller (1992) and Simangunsong, Hendry, and
Stevenson (2012) were used to group the identified approaches, which refer to two main methods
of uncertainty management (reducing and coping), under which there are eight uncertainty
management approaches (See Figure 1).
In the final phase of analysis, the identified uncertainty dimensions and uncertainty manage-
ment approaches were analyzed in terms of the capacity to add value to our understanding of
MNCs’ international decision-making (i.e., “how do the identified uncertainty dimensions and
uncertainty management approaches enhance our understanding of MNCs” international decision-
making?’). The review revealed several inconsistencies and debates among IB scholars about the
impact of uncertainties on MNCs’ decision-making and the determinants of MNC choices about
uncertainty management approaches.
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Reducing Coping
Uncertainty
(R1) Information (C1) Flexibility
Environmental uncertainty gathering (C2) Imitation
(U1) Economic uncertainty (R2) Proactive (C3) Reactive
(U2) Political uncertainty collaboration/ collaboration/
(U3) Government uncertainty Cooperation Cooperation
(U4) Cultural uncertainty (R3) Networking (C4) Control
(U5) Discontinuous uncertainty (C5) Avoidance
Industry uncertainty
(U6) Input uncertainty
(U7) Demand uncertainty
(U8) Competition uncertainty
(U9) Technological uncertainty Uncertainty management approaches
of a decision-making team
Firm uncertainty
(U10) Behavioral uncertainty
(U11) R&D uncertainty
(U12) Operating uncertainty
(U13) Previous experience Characteristics of individual decision-
maker
3. Findings
This paper presents an integrated framework (Figure 1) based on classifications of uncertainty
dimensions and approaches to managing uncertainty. The main reason for using an integrated
framework is the inconsistency in existing research regarding how concepts are used (See Table 2).
This has made it problematic to draw conclusions about what we know about the role of uncer-
tainty in MNCs’ decision-making. The framework comprises uncertainty dimensions that have been
modified based on the classification by Miller (1992) and also uncertainty management methods
modified based on the work of Miller (1992) and Simangunsong et al. (2012). The framework was
modified in response to the evidence emerging from the systematic literature review to include
both modified and new types of uncertainty and uncertainty management approaches that were
not anticipated in the original frameworks by Miller (1992) and Simangunsong et al. (2012). The
five characteristics of individual decision-makers that were recognized in the reviewed literature as
either having an impact on individual decision-makers’ perceptions of uncertainty, or on the choice
of uncertainty management approach, are not based on any pre-existing framework but emerged
from this review.
The framework is contingency-based and draws on both contextual and individual influences on
MNCs’ uncertainty management in international decision-making. The contextual part is repre-
sented by different dimensions of uncertainty, both external and internal to the firm, which MNCs
respond to in different ways. The individual influences concern how the characteristics of individual
decision-makers influence both their perceptions of uncertainty and the MNC’s approaches to
uncertainty management. The interlinkages between the different elements of the framework
are discussed in connection with this paper’s proposed research agenda.
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Table 2. Dimensions and measures of uncertainty in the IB literature
Uncertainty dimensions Terminology used Uncertainty measures used Example literature
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Economic (U1) Economic Country risk measures by Erramilli and Rao (1993), Erramilli & D’Souza, 1995
Uncertainty caused by fluctuations in economic Gatignon and Anderson (1988); high-risk countries
activities: e.g., foreign currency exchange, measures by Goodnow and Hansz (1972)
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Environmental uncertainties
Investment uncertainty Subjective measures of investment uncertainty K. D. Brouthers et al., 2008
measured by the stability of the political, social and
economic conditions, the risk of repatriating
income, the risk of government actions against the
firm
Government (U3) Government Subjective measures on government environmental Lewis & Harvey, 2001
Uncertainty caused by inability to predict policy measured by scale on tax policies, laws,
regulatory developments: e.g., reforms, barriers regulations, enforcement of laws
to income repatriation, regulations, level of
corruption
Institutional environment MNCs’ perceptual measure on institutional Chiao et al., 2010
environment measured by turbulence in
government administration, regulations on
domestic sales, export and import requirements,
communication gaps, expatriates’ regulations,
sourcing of raw materials, restrictions on
components’ production, restrictions on ownership,
requirements for technology transfer
Cultural (U4) Cultural Cultural distance measured by a Euclidean distance Slangen & van Tulder, 2009
Uncertainty about collective action when version of Kogut and Singh (1988) index
people are faced with differences between
their own values and values of the institutions
they are part of
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(Continued)
Table 2. (Continued)
Uncertainty dimensions Terminology used Uncertainty measures used Example literature
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Internal uncertainty Cultural distance measures by Kogut and Singh Erramilli & D’Souza, 1995
(1988) based on cultural dimensions by Hofstede
(1980)
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Discontinuous (U5) Discontinuous risk Disaster severity measured through no. incidents, Oetzel & Oh, 2014
Uncertainty caused by nature itself, terrorist no. people killed, duration of disaster
attacks, or technological disasters
Environmental issues Subjective measures on environmental issues Lewis & Harvey, 2001
measured by climate change, pollution of air,
water, soil, eco-efficiency, resource depletion,
social welfare, eco-sufficiency
Input (U6) Industry risk Subjective measures on industry risk measured by Liu, Gao, Lu, & Lioliou, 2016
Uncertainty associated with production inputs, availability of inputs, raw materials and
acquisition of adequate quantities and qualities components; prices of inputs, raw materials and
of inputs into production process components; availability of human resources;
availability of financial capital
Structural uncertainty Structural uncertainty measured as geometric Luo, 2003
average of standard deviations in output, sales,
and profit of the industry in which the firm
operates
Demand (U7) Munificence Industry sales measured as average growth in net Keats & Hitt, 1988
Uncertainty that relates to unexpected sales and operating income in the dominant
Industry uncertainties
changes in demand, lack of availability of industry as in Dess and Beard (1984)
complementary products, and presence of
substitute products
Product market Product market growth measured by a geometric Gaba et al., 2002
uncertainty average of growth rates of gross output and the
number of enterprises
Competition (U8) Market turbulence Subjective measures on market turbulence Tseng & Lee, 2010
Unpredictability of the future state of measured by changes in consumers and
competition in the host country market competitors faced by a firm
Dynamism Subjective measures on dynamism measured by Baum & Wally, 2003
perceptions of competitors’ actions
(Continued)
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Table 2. (Continued)
Uncertainty dimensions Terminology used Uncertainty measures used Example literature
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Techno-logical (U9) Technological uncertainty Subjective measures on environmental technology Lewis & Harvey, 2001
Uncertainty about the trade-offs between measured by product environmental attributes
durability benefits vs old technology cost and impact, new products introduction, changes in
Sniazhko, Cogent Business & Management (2019), 6: 1650692
production process
Turbulence Technological turbulence assessed by measures on Cadogan et al., 2003
competitive intensity, threats and opportunities
from changes in firm’s technological environment
by Jaworski and Kohli (1993) and Cadogan, Paul,
Salminen, Puumalainen, and Sundqvist (2001)
Behavioral (U10) Behavioral Subjective measures on the behavior of Lewis & Harvey, 2001
Inability to predict the actions and plans of environmental stakeholders measured by scale on
potential partners or members within the firm investors, community, supply chain, industry,
opinion formers, regulators
Control uncertainty Subjective measures of control uncertainty from Brouthers et al., 2008
Brouthers and Brouthers (2003) measured by the
cost of marketing and enforcing contracts,
uncertainty over maintaining quality standards,
the risk of dissemination of proprietary knowledge
R&D (U11) Corporation sources Not provided (conceptual paper) Haley, 2003
Unpredictability of R&D results
Firm uncertainties
Venture-level uncertainty Return on investment is measured by VentureXpert Liu & Maula, 2016
database classification—start-up, early stage,
expansion, later stage
Operating (U12) Operation risk Not provided (conceptual paper) Miller, 1992
Uncertainty about operation of the firm and
employees’ productivity
Total strategic Subjective measures on total risk measured by Brouthers, 1995
international risk averaging results of perceptions of control and
market complexity risks
(Continued)
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Table 2. (Continued)
Uncertainty dimensions Terminology used Uncertainty measures used Example literature
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Previous experience (U13) Previous experience Subjective measure on international experience Chiao et al., 2010
Firms’ previous operating experience that has measured by the ratio of foreign sales to total
an impact on a host country risk perception sales, the ratio of foreign assets to total assets, the
Sniazhko, Cogent Business & Management (2019), 6: 1650692
and management approaches ratio of foreign fixed assets to total fixed assets,
the ratio of foreign employees to total employees
and analyzed by exploratory factor analysis
Operational uncertainty Operational uncertainty assessed as no. Rhee & Cheng, 2002
international operational modes a firm had
undertaken prior to its entry into a foreign country;
no. years a firm had been involved in international
operations
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environmental, industry, and firm uncertainties. Miller’s (1992) framework was chosen because it is
exhaustive and highly cited in IB research (e.g., Ahsan & Musteen, 2011; Clark, Li, & Shepherd,
2017; Erramilli & D’Souza, 1995; Oetzel & Oh, 2014). One potential drawback is that it was not
based on a systematic review of the literature, nor has it been empirically examined in its complete
original form. Nonetheless, this paper takes Miller’s (1992) classification as a starting point and
builds on it as follows: First, a closer examination of the IB literature resulted in an extension of the
industry category of uncertainties by one dimension (i.e., technological). Second, the firm category
of uncertainties was modified (i.e., removing liability and credit dimensions of uncertainty and
adding previous experience), the social and product dimensions of uncertainty were relabeled
cultural and demand uncertainties, and the natural dimension of uncertainty was relabeled
discontinuous uncertainty. The 13 dimensions of uncertainty identified in the literature review
illustrate the multifaceted and complex nature of uncertainty in IB. However, inconsistent use
and measurement of the concepts made drawing conclusions on the existing knowledge of the
role of uncertainty problematic. Although most scholars agree that MNCs employ different uncer-
tainty management approaches in their decision-making, what is meant by uncertainty and how it
is measured differs from study to study. Table 2 presents the most significant differences in
conceptualization and measurement among the reviewed studies: studies are using different
concepts of uncertainty for capturing the same dimension of uncertainty, studies use the same
name of concepts for different uncertainties across categories, and studies are using different
measures for the same dimension of uncertainty.
One of the main objectives of this paper was to systematically review the treatment of uncer-
tainty in decision-making in the IB literature. Figure 2 illustrates that uncertainties in the environ-
mental uncertainty category have attracted the greatest research attention both in regard to MNC
strategic and operational decision-making. In particular, studies have examined environmental
uncertainty in terms of political (U2) (e.g., Agarwal & Ramaswami, 1992; Delios & Henisz, 2003a;
Kobrin, 1979), economic (U1) (e.g., Brouthers & Dikova, 2010; Prater, Biehl, & Smith, 2001; Song,
2015) and government (U3) (Akhter & Robles, 2006; Chiao, Lo, & Yu, 2010; Eroglu, 1992) uncer-
tainties in the host country, and thus focus on the formal part of a country’s environment. Other
studies examine environmental uncertainty in terms of cultural uncertainty (U4) (e.g., Cho &
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Padmanabhan, 2005; Dow, Cuypers, & Ertug, 2016) that emerges between the home and host
countries, and therefore focus on the informal part of the country’s environment.
Several other studies have directed attention on to the impact of industry uncertainties. For
example, Elango and Sambharya (2004) found that competition and demand uncertainties have
a significant impact on MNCs’ entry mode decisions. Gray (1994) places more focus on technolo-
gical uncertainty in MNCs’ entry mode decisions. Among the different dimensions of uncertainty in
the firm uncertainty category, the MNC’s previous experience has attracted the greatest research
attention and is broadly recognized as having an impact on an MNCs’ identification and perception
of various other dimensions of uncertainties (Brouthers, 1995), entry mode choice decisions
(Brouthers, Brouthers, & Werner, 2008), or location decisions (Delios & Henisz, 2003b).
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Table 3. Uncertainty categories and frequency in the reviewed articles
MNC decision type Article type Number of studies Uncertainty categories considered per study
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Operational Empirical 18
Example literature: Desbordes, 2007; Gaur et al., 2007; Jiménez, 2010; Jiménez, Benito-Osorio, Puck, & Klopf, 2017; Jiménez & Delgado-Garciá, 2012;
Jiménez, Luis-Rico, & Benito-Osorio, 2014; Keillor, Wilkinson, & Owens, 2005; Kelly & Philippatos, 1982; Kennedy, 1984
Operational Empirical 9
Example literature: Celly, Spekman, & Kamauff, 1999; Chattopadhyay, Glick, & Huber, 2001; Chen & Kamal, 2016; Cui, Griffith, Cavusgil, & Dabic, 2006;
Hodgkinson et al., 2016; Keats & Hitt, 1988; Lee & Makhija, 2009a; Liu et al., 2012
Operational Empirical 10
Example literature: Achrol & Stern, 1988; Gaba et al., 2002; Galang, 2012; Griffith, Harmancioglu, & Droge, 2009; Grunert et al., 2010; Liu et al., 2016; Luo,
2003; Manolis, Nygaard, & Stillerud, 1997; Mascarenhas, 1982
Operational Empirical 3
Example literature: Beckman et al., 2004; Ottesen & Grønhaug, 2004; Sartor & Beamish, 2014
Operational Empirical 1
Example literature: Xu et al., 2004
Operational Conceptual/ 4
Theoretical
Example literature: Akhter & Choudhry, 1993; Di Gregorio, 2005; Spich & Grosse, 2005
Operational Conceptual 3
Example literature: Haley, 2003; Miller, 1992; Sashi & Karuppur, 2002
Entry mode Empirical 7
Example literature: Dow et al., 2016; Erramilli & D’Souza, 1995; Hong & Lee, 2015; López-Duarte & Vidal-Suárez, 2010; Malhotra, Lin, & Farrell, 2016; Slangen
& van Tulder, 2009; Williams, Lukoianova, & Martinez, 2017
Entry mode Empirical 3
Example literature: Cadogan et al., 2003; Elango & Sambharya, 2004; J. Li & Li, 2010
Entry mode Empirical 8
(Continued)
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Table 3. (Continued)
MNC decision type Article type Number of studies Uncertainty categories considered per study
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Example literature: L. E. Brouthers, Brouthers, & Werner, 2000; K. D. Brouthers, Brouthers, & Werner, 2002; Campa, 1994; Dickson & Weaver, 1997; Gray,
1994; Luo, 2001; Morschett et al., 2010; Sanchez-Peinado & Pla-Barber, 2006
Entry mode Empirical 7
Example literature: Brouthers, 1995; Brouthers et al., 2008; Brouthers & Dikova, 2010; Chiao et al., 2010; Li & Rugman, 2007; Whitelock & Jobber, 2004;
Zafar, Mohamad, Tan, & Johnson, 2002
Entry mode Empirical 7
Example literature: Agarwal & Ramaswami, 1992; Brouthers & Brouthers, 2003; Cho & Padmanabhan, 2005; Delios & Henisz, 2003a; Henisz & Delios, 2001; Ji
& Dimitratos, 2013
Entry mode Empirical 1
Example literature: Sutcliffe & Zaheer, 1998
Entry mode Conceptual 2
Example literature: Akhter & Robles, 2006; Eroglu, 1992
Location Empirical 4
Example literature: Arregle, Miller, Hitt, & Beamish, 2016; Duanmu, 2012; Kraus, Ambos, Eggers, & Cesinger, 2015; Oetzel & Oh, 2014
Location Empirical 1
Example literature: Dowell & Killaly, 2009
Location Empirical 2
Example literature: Delios & Henisz, 2003b; Lien & Filatotchev, 2015
Location Conceptual 1
Example literature: Burgers & Padgett, 2009
Location Conceptual 1
Example literature: Siqueira, Priem, & Parente, 2015
Divestment Empirical 2
Example literature: Berry, 2013; Song, 2014
(Continued)
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Table 3. (Continued)
MNC decision type Article type Number of studies Uncertainty categories considered per study
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Table 4. Approaches to uncertainty management in the IB literature
Uncertainty management approaches Description Example literature
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(R1) Information gathering Complete uncertainty reduction: gathering information Grunert et al., 2010; Ji & Dimitratos, 2013; Keats & Hitt,
until the decision-making point where analytic 1988; Ottesen & Grønhaug, 2004; Petersen et al., 2008
comprehensiveness of the environment is achieved.
Sniazhko, Cogent Business & Management (2019), 6: 1650692
(R2) Proactive collaboration/cooperation Collaboration with local subsidiaries to reduce Brouthers et al., 2008; Slangen & van Tulder, 2009
uncertainties related to the general environment, industry
and firm.
(R3) Networking Generation of information about a firm’s market through Beckman et al., 2004; Luo, 2003
establishing new or reinforcing already existing networks,
the dissemination of this information to relevant decision-
makers, and development and implementation of
responses.
Uncertainty Reduction
(C1) Flexibility Organizational ability to adapt to uncertain and fast- Chattopadhyay et al., 2001; Chiao et al., 2010; Lee &
changing environmental conditions: Makhija, 2009a; Lee & Makhija, 2009b; Li & Li, 2010; Liu
- Diversification of geographic markets or products, et al., 2012; Sanchez-Peinado & Pla-Barber, 2006; Sashi &
-Operational adaptation. Karuppur, 2002
(C2) Imitation Imitation of rival organizations’ strategies and actions. Gaba et al., 2002; Miller, 1992
(C3) Reactive collaboration/cooperation Multilateral agreements that are used to increase the Akhter & Robles, 2006; Brouthers, 1995; Brouthers &
predictability of environmental conditions: Brouthers, 2003; Brouthers et al., 2008; Burgers & Padgett,
-JV or Alliances, 2009; Cuypers & Martin, 2010; Dickson & Weaver, 1997;
-Franchising/Licensing, Eroglu, 1992; Erramilli & D’Souza, 1995; Miller, 1992;
-Agreements. Sutcliffe & Zaheer, 1998
(C4) Control Market control to threaten and push competitors into Akhter & Robles, 2006; Baum & Wally, 2003; Brouthers
Uncertainty Coping
more predictable behavior et al., 2002; Brouthers & Brouthers, 2003; Brouthers et al.,
Unilateral control of operations: 2008; Brouthers & Dikova, 2010; Burgers & Padgett, 2009;
-Vertical integration, Mayrhofer, 2004; Morschett et al., 2010; Sanchez-Peinado
-Horizontal integration, & Pla-Barber, 2006; Tseng & Lee, 2010
-Market Control (includes the speed of the decision).
(C5) Avoidance Postponement of the company’s actions until uncertainty Dowell & Killaly, 2009; Whitelock & Jobber, 2004
level faced by the company is acceptable.
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Information gathering (R1) as an uncertainty reduction approach is used by MNCs that avoid
risky decisions and act when the gathered information is considered enough to achieve analytical
comprehensiveness of the environment (e.g., Brouthers et al., 2008; Ji & Dimitratos, 2013). Studies
reveal that information gathering is an approach to uncertainty reduction where the MNCs scan
the external environments and collect necessary data without the involvement of other partners.
Information gathering is the most frequently implemented approach adopted to reduce uncer-
tainty and is primarily used to minimize demand, competition, and cultural uncertainties (e.g.,
Cadogan, Cui, & Li, 2003; Grunert, Trondsen, Campos, & Young, 2010; Keats & Hitt, 1988; Petersen,
Pedersen, & Lyles, 2008; Rhee & Cheng, 2002).
Uncertainty can be reduced through networking (R3). As IB studies reveal, uncertainty reduction
through networking (R3) happens when the MNC collects data through its social relationships and
via the reinforcement of existing networks (Luo, 2003; Ottesen & Grønhaug, 2004). As such,
proactive collaboration/cooperation (R2) can be a part of networking (R3) and happens within
larger networks (Ottesen & Grønhaug, 2004). In the IB literature, networking is primarily used to
reduce industry uncertainties: input, demand and competition (e.g., Beckman et al., 2004; Luo,
2003).
Flexibility (C1) is exhibited as diversification and operational adaptation. Diversification helps the
MNC cope with industry uncertainties through its involvement in different markets or diversifica-
tion of its products (e.g., Chiao et al., 2010; Liu, Shah, & Babakus, 2012). Operational adaptation is
sought through adaptation of organizational structure or strategy. As an example, under high
internal uncertainty some MNCs shift from FDI to non-equity modes (Lee & Makhija, 2009a).
To cope with uncertainty some MNCs choose imitation (C2). By mimicking a rival’s strategy, MNCs
assume that the rival’s actions incorporate learning that will help to avoid the errors of early
movers (Gaba, Pan, & Ungson, 2002). However, an industry leader would be able to predict the
response of competitors due to their responses being mere imitations of its own strategic actions
(Miller, 1992). In the context of international decision-making, political, government, cultural,
demand, and competition uncertainties can be managed through the imitation of competitors’
actions (e.g., Gaba et al., 2002).
The reviewed literature revealed that reactive collaboration/cooperation (C3) is the most com-
mon approach taken to cope with environmental and industry uncertainties (e.g., Brouthers, 1995;
Brouthers & Brouthers, 2003; Dickson & Weaver, 1997; López-Duarte & Vidal-Suárez, 2010;
Morschett, Schramm-Klein, & Swoboda, 2010; Tseng & Lee, 2010). As environmental and industry
uncertainties increase, MNCs tend to select strategies that shift the uncertainty and risk to their
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partners (Brouthers, 1995). However, collaboration/cooperation becomes less valuable in the pre-
sence of high growth potential (J. Li & Li, 2010).
MNCs may choose unilaterally to control (C4) uncertainty rather than to passively accept its
conditions. Control entry modes are frequently observed among knowledge-intensive MNCs
(Sanchez-Peinado & Pla-Barber, 2006). Vertical integration with suppliers is used as an attempt
to control input and demand uncertainties (e.g., Akhter & Robles, 2006). Horizontal integration
(e.g., mergers and acquisitions) is used to control uncertainties related to competition, particularly
during the transformation stage of an economy where an MNC operates (Burgers & Padgett, 2009;
Mayrhofer, 2004).
Uncertainty avoidance (C5) takes place when the level of both environmental and industry
uncertainties faced by the MNC is unacceptable. MNCs postpone their action as a means of
complete uncertainty avoidance until the value of an investment opportunity can be accurately
predicted (e.g., Dowell & Killaly, 2009; Whitelock & Jobber, 2004).
Second, among the 114 reviewed articles, 22 place a strong emphasis on individual decision-
makers as the determiners of the uncertainty management approaches used by an MNC, particu-
larly in situations where MNC behavior deviates from that predicted by theoretical models (e.g., in
the studies by Gray, 1994,; Richards & Yang, 2007). Therefore, this paper scrutinizes individual
decision-makers and their characteristics to understand their impact on their MNC’s choice of
uncertainty management approach.
Previous decision-making experience (I1), or lack of it, can have a significant impact on uncer-
tainty perception and the desire for control (e.g., Makhija & Stewart, 2002; Whitelock & Jobber,
2004). More specifically, the less managerial experience a manager had, the higher the level of
perceived uncertainty and the greater the chance that a third party would be involved in the
control of foreign operations (Brouthers, 1995).
The reviewed literature identifies two of Hofstede’s (1980) cultural dimensions that have been
applied at the individual level to illustrate how the characteristics of individual decision-makers
shape their perceptions of uncertainty: uncertainty avoidance—more frequently referred to in
the literature on international decision-making as tolerance for ambiguity (I2)—and
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Table 5. Characteristics of individual decision-makers and their influence on approaches to uncertainty management in the IB literature
Characteristics of individual Terminology used Effect on decision-making Example literature
https://doi.org/10.1080/23311975.2019.1650692
decision-makers
I1 Previous decision-making experience Previous experience Lack of previous decision-making Brouthers, 1995; Makhija & Stewart, 2002;
experience leads to a higher level of Reid, 1981; Whitelock & Jobber, 2004
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individualistic/collectivistic orientation (I3). Tolerance for ambiguity (I2) refers to the tendency of
certain decision-makers to perceive ambiguous situations as desirable (Eroglu, 1992). A clear
distinction is that individuals with a low tolerance for ambiguity tend to cease their information
processing activities early and are resistant to new information. Individuals that are more
tolerant of ambiguity are more receptive to external information (Makhija & Stewart, 2002;
Yasai-Ardekani, 1986). In IB studies, decision-makers with a low tolerance for ambiguity commit
resources to foreign markets only if environmental and industry uncertainties are reduced to
a level beneath the maximum tolerable risk. However, it remains unclear how ambiguity-averse
decision-makers behave if the perceived environmental and industry uncertainties increase with
time (Petersen et al., 2008). According to the maximum tolerable risk logic, the solution is to
withdraw from the foreign market (Johanson & Vahlne, 1977). However, there is a need for
more empirical research to understand the actual behavior of individual decision-makers with
different levels of tolerance for ambiguity.
Hierarchical position in the organization (I4), which includes organizational roles, experiences,
beliefs and ideologies, is shown to affect uncertainty perceptions (Yasai-Ardekani, 1986). The
general argument is that organizational structure affects environmental scanning and information
processing, including information access, interpretation, and transmission. Managers in higher
hierarchical positions have better access to environmental scanning and information processing
than managers in lower hierarchical positions. Therefore, information gathering, and the reduction
of uncertainty becomes easier for managers in higher positions. Furthermore, an individual’s
hierarchical position influences the perception of the external environment (Sonnenfeld, 1981as
in Yasai-Ardekani, 1986).
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Inconsistencies in the way uncertainty is measured can also partly be seen as contributing to
these conflicting findings. For example, the finding by Slangen and van Tulder (2009) on govern-
ment uncertainty being a better proxy for external environment uncertainty than political uncer-
tainty can be explained through the integration of different measures for similar dimensions of
uncertainty. The study uses Kaufmann et al.’s (2004) measures for political uncertainty as
a sudden regime change. Decision-makers may pay relatively little attention to this likelihood
while making, for example, entry mode decisions. Furthermore, in spite of the fact that most of the
reviewed studies looked at MNC assessments of political uncertainty, they still measure political
instability rather than the potential impact of politics on the firm (cf. Delios & Henisz, 2003a,
2003b; Henisz & Delios, 2001; Kobrin, 1979). Another example, the study by Gaur, Delios, and Singh
(2007) revealed that MNCs rely more on expatriates in situations marked by high levels of
governmental and political uncertainty. The study by Xu, Pan, and Beamish (2004) found the
opposite: greater government and political uncertainty is associated with a lower level of equity
ownership and a lower expatriate presence. However, a deeper analysis of these studies revealed
that Gaur et al. (2007) measure governmental and political uncertainties through governmental
and political indices of the host country, while Xu et al. (2004) focus more on demand forecasts of
the host country and a firm’s operational effectiveness. In terms of the measures of cultural
uncertainty, linguistic and religious distances have a greater impact on MNCs’ behavior than
more traditional measurements of cultural uncertainty (Dow et al., 2016). Cultural distance has
been criticized as being a less relevant driver of managerial decision-making than perceptions
regarding the host market’s environment (Xu & Shenkar, 2002).
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the uncertainties it recognizes and how that affects its decisions. The same inconsistencies prevent
us accurately evaluating the contextual environment within which MNCs operate and within which
decisions are made (Di Gregorio, 2005). Furthermore, the diverse ways in which different uncer-
tainties are conceptualized and measured presents a threat to the validity of empirical studies, and
ultimately to theory development (Delios & Henisz, 2003a).
In light of these limitations, two main recommendations for future research are offered. First,
future research should choose dimensions of uncertainty that are more conceptually and statis-
tically parsimonious in order to prevent further confusion. Miller (1993) and Werner, Brouthers, and
Brouthers (1996), for instance, recommend choosing uncertainty concepts that are inter-related
and consistent with previous studies on uncertainty. They offer dimensions of uncertainty that are
theoretically justified and exhibit construct and discriminant validity. Therefore, this paper recom-
mends integrating similar types of uncertainty constructs into future research to achieve more
comprehensive measures. To address these methodological issues, future research questions
might include: “What is the nature of the relationship between different dimensions of uncertainty
at the conceptual level, and which constructs should be included in future efforts at scale devel-
opment? To what extent is the grouping of different constructs of uncertainty generalizable across
industries and countries, or do they interact in different ways?”
Second, since most of today’s uncertainty measures are objective and taken from country
reports (84 quantitative studies out of the total 114 articles reviewed use statistical indices of
the countries to measure MNC’s uncertainties), our understanding of MNC decision-making tends
not to be based on the subjective reality of the uncertainties faced by the actual decision-makers.
This is problematic, since this fails to acknowledge that people and teams make decisions, not the
organization, and thus ignores a potentially wide and powerful range of explanations behind MNC
decision-making that could complement existing theories and models. As studies have shown,
some individual decision-makers might perceive specific uncertainties differently than the rest of
the MNC management, or not acknowledge them at all (Kiss, Williams, & Houghton, 2013).
Therefore, more studies that integrate subjective measures of uncertainty are needed in order to
understand how decision-makers within MNCs actually differentiate between, and respond to,
different dimensions of uncertainty. Subjective measurements of uncertainty are more likely to
provide findings that are representative of what individual decision-makers actually experience
(e.g., as in Petersen et al., 2008 or Whitelock & Jobber, 2004).
In a recent study, Haley found over 80 percent of MNC managers used qualitative personal
judgments to assess uncertainty, while fewer than 20 per cent used statistical techniques (2003).
Therefore, the integration of more subjective measures of uncertainty could provide a more
realistic account of how MNCs perceive and prioritize different uncertainties. Future research
questions could thus address the following kinds of questions: How much heterogeneity exists in
the subjective perception of different kinds of uncertainty between MNC decision-makers? To what
extent does this heterogeneity provide grounds for aggregation at the MNC level? How does
heterogeneity and homogeneity in uncertainty perceptions influence decision-making? By inte-
grating dimensions of uncertainty that are more conceptually and statistically parsimonious, and
through the use of more subjective measures, it is possible to improve the predictive power of
different theoretical models of MNC behavior under conditions of uncertainty.
4.2. Addressing the lack of diversity in uncertainty dimensions included within single studies
The second limitation in existing IB research is that studies tend to focus on uncertainties solely
within one category (i.e., environmental or industry category) and largely overlook firm-level
dimensions of uncertainty. As the reviewed literature revealed, environmental and industry uncer-
tainties can be managed through different approaches. These interlinkages are shown as two solid
arrows from environmental and industry uncertainties to uncertainty management methods in
Figure 1. A dotted arrow that connects firm uncertainties and uncertainty management
approaches denotes that more research is needed. Although there has been a move toward
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integrating uncertainties from different categories (e.g., Beckman et al., 2004; Brouthers et al.,
2008; Galang, 2012; Henisz & Delios, 2001; Liu & Maula, 2016), the vast majority of studies examine
uncertainties in parallel rather than together within the same study (see Table 3). This is a major
shortcoming since a focus on only one uncertainty, such as political uncertainty, can lead to ill-
informed entry mode decisions if other uncertainties are ignored (e.g., Brouthers, 1995). Empirical
studies have found significant relationships between one or more uncertainty dimensions and MNC
entry mode choice (Ahmed, Mohamad, Tan, & Johnson, 2002). However, the interlinkages between
different categories of uncertainty and their effects on uncertainty management and decision-
making remain largely unexplored in IB research.
Not including a wider spectrum of uncertainties within single studies prevents us from under-
standing the relationships between them and only presents with partial explanations for MNC
decision-making. Including several dimensions not only helps to address this, but also provides
a picture that is closer to the empirical reality that decision-makers within MNCs have to confront.
One such example is that IB research appears to be more concerned with environmental or
industry uncertainties, while MNCs are reported to be more focused on resolving firm uncertainties
in the course of international decision-making. As Buckley, Devinney, and Louviere (2007)
observed, MNCs planning international activities tend to follow theoretically predictive paths.
However, the actual implementation of these activities is less aligned with traditional models. As
the authors explain, decision-makers pay more attention to firm-related uncertainties (e.g., ROI,
production cost, exploitation and protection of assets) when they implement decisions, and less to
environmental uncertainty (e.g., political instability), which tends to be a factor considered more
during the planning stage. By considering firm dimensions of uncertainty along with environmental
and industry uncertainties, international decision-making models will not only acquire an
enhanced ability to explain the kind of MNC behavioral variation that is observed, but will also
open opportunities to examine the interactions between the different types of uncertainty alluded
to above.
In terms of future research, due to the complex business environments in which MNCs operate,
the trade-off among different dimensions of uncertainty and understanding their contextual effect
on decision-making remains crucial within the field of IB. However, it is important to understand
not only how one category of uncertainty is managed, but how the simultaneous impact of
multiple uncertainties from different categories influences how MNC operations are and should
be managed. Accordingly, future research should address the following kinds of research ques-
tions: “On what dimensions of uncertainty do decision-makers tend to concentrate during inter-
national decision-making? Why is this and what effect does this have on decisions? What
uncertainty management methods do MNCs choose when they face various uncertainties across
different categories, and do these methods vary based on the type of uncertainties they face?”
Some scholars offer more specific questions, such as: “Does the multilevel interaction of factors at
nation-, industry-, firm-, and project-levels influence entry choice? Does the proper alignment of
entry mode choice with external and internal antecedents actually lead to superior performance?”
(Luo, 2001, p. 467) and “How do firm- and country- level variables in addition to industry-level
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variables influence the three types of MNC entry mode (i.e., greenfield, acquisition, joint venture)?”
(Elango & Sambharya, 2004, p. 121).
This paper also encourages more research on firm uncertainties. External uncertainties at the
environmental and industry level have been incorporated more frequently than internal, firm-
related uncertainties. A potential explanation is that firm uncertainties are considered more
controllable than industry or environmental uncertainties (Beckman et al., 2004). However, empiri-
cal research on the management of firm uncertainties (e.g., R&D uncertainty, operating uncer-
tainty) remains very limited. Furthermore, the reviewed studies revealed conflicting findings about
the impact of previous experience on international decision-making. Future research on these
dimensions of uncertainty would serve to enhance our understanding about the impact of firm-
level uncertainties on MNCs’ international activities. Research questions might include: What kinds
of firm uncertainties are the most important in decision-making, and when and how are these
uncertainties considered by MNCs? How do MNCs approach the management of firm uncertainties
during their international decision-making?
Furthermore, one central limitation within existing research that cannot be resolved without
understanding individual decision-makers is the conflicting findings and lack of consensus on MNC
choices of uncertainty management approaches. Empirical studies illustrate that MNCs are more
likely to choose a different cooperative/collaborative approach (e.g., a joint venture) than
a controlling approach (e.g., a wholly owned subsidiary) when entering culturally distant countries
(Brouthers & Brouthers, 2001). Other studies, however, find that greater cultural uncertainty
increases an MNC’s propensity to choose WOS (Tsang, 2005). Other studies present similar con-
flicting conclusions (e.g., Brouthers et al., 2008; Delios & Henisz, 2003a; Prater et al., 2001; Song,
Lee, & Makhija, 2015; Li & Li, 2010; Sartor & Beamish, 2014).
This paper suggests that one way to explain and address these inconsistencies is to scrutinize
the role of individual decision-makers in the MNC’s choice of uncertainty management approaches.
Recent studies observe that managers do not always define or react to uncertainty in ways that
theoretical decision models would predict (e.g., Buckley et al., 2007; Forlani, Parthasarathy, &
Keaveney, 2008). For instance, managers do not always think in terms of the probability of loss,
but rather in terms of the magnitude of loss, and that is why their ways of managing uncertainty
are more risky than firm-focused theories initially predict (Buckley et al., 2007). Furthermore, the
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study by Richards and Yang (2007) did not find support for transaction cost logic holding that when
environmental uncertainty is low, MNCs prefer to have entry modes involving higher resource
commitments. In the same study, this is explained as MNCs making different equity ownership
decisions in similar uncertain circumstances due to managers having different risk preferences
that influence different transaction governance structures. Furthermore, managers from different
national cultures are found to act differently, even in similar uncertain circumstances, due to their
heterogeneous, subjective risk perceptions and risk preferences. The study by Haley (2003) found
that managerial perceptions of environmental-, industry- and firm-related uncertainties have an
effect on MNC decision-making. Acquiring a good understanding of the kinds of characteristics that
influence managers’ perceptions of uncertainty and what influences their approaches to managing
it, would offer insights into the micro-foundations underlying MNC decision-making. MNCs’ deci-
sions are mediated by individual decision-makers, and the explanation of MNC decisions is there-
fore inherently a shorthand for a more complicated, micro-foundation-driven explanation
(Coleman, 1990).
Future research in this domain could thus benefit from addressing the connections between the
characteristics of the individual decision-maker and subjective perceptions about different dimen-
sions of uncertainty (see dotted line in Figure 1). This could include the following questions: How do
individual decision-makers manage perceived uncertainties? What influences the individual deci-
sion-maker’s choice of uncertainty management approach? Are there any other characteristics of
individual decision-makers not identified in this review that might be equally or more influential?
Liesch et al. (2011, p. 868) offer even more specific research questions on this topic such as: “How
does learning affect the individual manager’s ability to make astute risk assessments and to
accommodate risk? To what extent does this provide a robust explanation of successful interna-
tional expansion trajectories and idiosyncratic internationalization behaviors?”
It is commonplace for most key MNC decisions (e.g., those on entry mode or internationalization
expansions) to be made by organizational teams at MNC headquarters. Headquarters’ decisions are
indicators of the MNC’s optimal interest. In most studies, both headquarters at the collective level and
managers at the individual level are portrayed as rational decision-makers whose interests are
aligned (Aharoni et al., 2011). Such perceptions over-simplify MNCs’ decision-making processes and
shift focus from the decision-making process to the outcome. Ignoring the process in this way may
lead to misleading findings, since decision-makers daily face uncertainty arising from factors in the
environment, industry, and firm (Buckley et al., 2007). Within an MNC, individual perceptions of
foreign markets are likely to differ and there is no simple path from an individual’s perception to
the MNC’s perception (Coleman, 1990; Felin & Hesterly, 2007; Foss, Husted, & Michailova, 2010; Gupta,
Tesluk, & Taylor, 2007). Drawing on this multilevel perspective, it is important to understand the
interconnections between the characteristics of individual decision-makers, their impact on
a decision-making team’s preference for uncertainty and how that manifests itself at the MNC
level. An example question for future research in this regard could be: How do individual decision-
makers’ uncertainty management preferences influence MNC uncertainty management behavior at
the team and firm levels? Piaskowska and Trojanowski (2014, p. 55) offer more specific future
research questions: “How do executives’ attributes, beyond their demographic characteristics such
as age, tenure, education, experience or nationality, influence their top management team and
international strategic decisions? What is the role of emotions, personalities, and values in these
decisions?” In Figure 1, this research requirement is illustrated as a dotted arrow from the character-
istics of the individual decision-maker to the decision-making team’s uncertainty management
approaches to MNC uncertainty management methods.
5. Conclusion
Uncertainty is currently the only constant faced by MNCs. Because it has a significant impact on
the choices that MNCs make during their international decision-making, uncertainty is an impor-
tant phenomenon to study. This study has described various dimensions of environmental, indus-
try and firm uncertainty faced by MNCs and the approaches to uncertainty reduction and coping
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they use to manage such uncertainty. Through the evidence of its systematic literature review, this
paper has brought awareness that uncertainty is conceptualized and measured inconsistently in
the IB literature and this is problematic because it leads to fragmented and conflicting findings
about MNCs’ behavior and decision-making. Accordingly, this paper has offered an integrative
framework that organizes and synthesizes dimensions of uncertainty into modified and detailed
categorizations that are relevant for the IB audience. This framework encourages a more consis-
tent use of uncertainty dimensions and integration of a wider spectrum of different kinds of
uncertainties within single studies.
Furthermore, this paper has also revealed that in situations where MNC behavior deviates from
that predicted by theoretical models, the role of those individual decision-makers who determine
the uncertainty management approaches used by an MNC becomes influential. Reflecting on
systematic review findings, this paper has identified five integrating characteristics of the key
individual decision-makers: previous decision-making experience, tolerance for ambiguity, indivi-
dualistic/collectivistic orientation, position in the organizational hierarchy, decision-making orien-
tation. Understanding the impact of individual decision-makers and their characteristics on MNCs’
choice of uncertainty management approach is important because it would add significantly to the
predictive validity of theoretical models.
Lastly, the paper has offered an agenda for future research discussing three critical sugges-
tions. In the first place, to achieve more conceptually and statistically parsimonious dimen-
sions of uncertainty, future research should conduct more studies on the generalizability of
different constructs of uncertainty across industries and countries and integrate subjective
measures of uncertainty. In the second suggestion, future research should integrate a wider
spectrum of uncertainties within single studies. By including several dimensions of uncertainty
within a single study and considering firm dimensions of uncertainty along with environmental
and industry uncertainties, international decision-making models will be supplemented with
a greater variation of MNC behavior under the contextual effect of multiple uncertainties on
MNC operations. The third suggestion puts forward the notion of individual managers’ percep-
tions of uncertainty and their choice of uncertainty management approaches. Understanding
the characteristics that influence managers’ perceptions of uncertainty and the methods
available to manage it would in turn advance our understanding of the micro-foundations
underlying MNC decision-making.
Collectively, it is hoped that this systematic review of the literature and these suggestions for
future research serve to enrich this significant stream of IB research.
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flexibility for its different forms. Similar simplification is market uncertainty, and network partner selection.
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